Jamaica moves on plans for TT LNG

Among the seven companies that have indicated their interest in the project is the Wood group of Houston, Texas. A statement from the Jamaican government said representatives from the company’s subsidiary in Trinidad and Tobago, the Neal and Massey Wood Group visited the proposed site before it made its formal bid.

Construction of the facility is expected to begin by mid-2006 and commissioned into service by 2008. It would allow for the receipt and storage of the gas in its cold liquid form at Port Esquivel, where it would be regasified and distributed through pipelines to end users.

Trinidad and Tobago and Jamaica have signed a Memorandum of Understanding (MOU) for the supply of 1.1 million tonnes of LNG per annum at undisclosed agreed prices for twenty years.

A cooperation agreement between the two countries is being actively pursued by a joint development team which was established to refine the technical and economic parametres of the project. Companies that would benefit directly from the construction of the LNG facility include JAMALCO, the Jamaican aluminium company and the Jamaica Public Service Company (JPSCo) power plants.

The importation of LNG would also aid JAMALCO in its planned capacity expansion. Noting that the processing of aluminium is a very "energy-intensive activity," Jamaica’s Special Envoy on Energy Matters, Ambassador Anthony Hylton said the reduced energy cost and certainty of pricing resulting from the MOU would auger well for the company’s expansion.

JPSCo’s general manager David Cook said the power company hoped to substitute petroleum with LNG to produce more than 300 megawatts of its current production of 600 megawatts of electricity.

"This basically would provide a more fuel-efficient base that would ultimately benefit our customers," he said. Apart from the construction of the LNG facility, Jamaica plans to utilise

the cold energy from gas to provide power to a proposed industrial park that would be constructed alongside the LNG terminal. The park would include businesses that require high amounts of energy in their manufacturing processes. Jamaica’s Prime Minister PJ Patterson estimated that US$1.3 billion of new investments were required over the next five years to meet the increased demand for power, modernise the system to achieve high levels of efficiency and to diversify the source of power to incorporate LNG, among others.

Lamenting the island’s continuing high oil import bill, Patterson said these continue to have an adverse effect on its international competitiveness affecting both export and domestic markets.

The island’s cost of oil importation has tripled from US$316 million seven years ago.

A bid process for 24 drilling blocks is now underway and will close on July 15, 2005.

The increased import cost is greater than the combined net foreign exchange earnings of Jamaica’s two largest foreign exchange earning sectors, tourism and bauxite which have shown improved performance over recent year.

Jamaica’s annual import costs have moved from being some 20%-30% of export earnings to over 50% currently. "The increased costs of electricity for light and power and fuel for transportation are having a distorting effect on the use of disposable income by most persons, resulting in, among other things, more pressure being put on the State, than otherwise would have been the case, in areas such as education and health care," Patterson said while presenting the 2005-2006 national budget two months ago.

"The increased costs pose threats to our inflation targets and the value of our currency. Were the present situation of the international energy market just one of its periodic shocks, — of which we have had three major ones over the last 30 years excluding the current situation — one could, so to speak ‘fasten our seatbelts’ until we entered calmer weather.

"The general consensus is that this not the case. Supply constraints, the demand of the international economy, especially China and other factors, seem to indicate that this is a permanent change for the worse as far as an oil-importing dependent economy like ours is concerned," he told the Parliament.

He said the international energy market has moved adversely for Jamaica and its development appears not to be temporary nor will it be set right in the next term.

"Indeed, the change appears to be a permanent one and as a country we must respond in a meaningful way to ensure that not only does the economy survive but that it records appreciable, sustainable and equitable growth."

Outlining his government’s new energy policy, Patterson said these include reducing dependency on fuel oil for the production of electricity by the use of alternatives such as LNG, wind, water and solar energy.